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secure the 1989 letter of credit that they had used for the 1987
letter of credit.
6. 1990 Letter of Credit
On April 15, 1990, petitioners applied for another letter of
credit in favor of Voier to secure the 1989 note. Petitioners
obtained a letter of credit on April 16, 1990 (the 1990 letter of
credit). As with the 1989 letter of credit, the 1990 letter of
credit allowed petitioners to pay any amounts drawn on it. The
1990 letter of credit expired on April 15, 1991, and could be
renewed for 1 year.
C. 1990 Key Bank Loan
In 1990, petitioners asked Evergreen Bank for a line of
credit to cover Seattle Pump's working capital needs. Evergreen
Bank denied petitioners’ request.
Key Bank of Puget Sound (Key Bank) agreed to grant a line of
credit to petitioners if they gave Key Bank all of Seattle Pump’s
loan business. Petitioners agreed to refinance their obligation
to Voier through Key Bank. On July 1, 1990, petitioners borrowed
$285,000 from Key Bank and paid Voier in full. Evergreen Bank
reconveyed the deeds of trust to petitioners and petitioner’s
brother. Petitioners and petitioner’s brother gave one deed of
trust to secure the Key Bank Loan. The deed of trust covered the
1-acre parcel that petitioners owned and on which they lived and
a separate 4-acre parcel that petitioners and Thomas Malone
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